Rice Genomics and Genetics 2015, Vol.6, No.5, 1-10
1
Research Article Open Access
Pricing Contacts and Price Leadership in the Market for Imported Rice in
Southwest Nigeria
Agunbiade B.O., Mafimisebi T.E., Ikuemonisan E.S.
Department of Agricultural & Resource Economics, The Federal University of Technology, P.M.B. 704, Akure, Ondo State, Nigeria
Corresponding author email:
Rice Genomics and Genetics, 2015, Vol.6, No.5 doi:
10.5376/rgg.2015.06.0005
Received: 07 Apr., 2015
Accepted: 10 Jun., 2015
Published: 16 Jun., 2015
Copyright
©
2015
Agunbiade et al., This is an open access article published under the terms of the Creative Commons Attribution License, which permits
unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Preferred citation for this article:
Agunbiade B.O., Mafimisebi T.E., and Ikuemonisan E.S., 2015, Pricing Contacts and Price Leadership in the Market For Imported Rice In Southwest Nigeria,
Rice Genomics and Genetics, 6(5): 1
-
10 (doi:
10.5376/rgg.2015.06.0005
)
Abstract
As Nigeria relies on importation for 56% of its national annual rice consumption, rice availability and prices are major
welfare determinants in resource-poor households. Consequently, rice market integration, which will occasion price stability and
pricing efficiency, are vitally important. This study examined pricing contacts in the imported rice market (IRM) in Southwest,
Nigeria, using time-series data which were first subjected to stationarity tests. The major analytical tools used were growth rate
model, coefficient of variation (CV) and Johansen co-integration model. Average growth in price was highest in Osun Market
(33.4%), followed by Oyo Market (31.3%) and Ondo Market (29.8%). The highest average growth rate was recorded in year 2008
while negative growth rate was obtained across all IRM locations in the year 2010. This could be linked to lifting of the ban on rice
imports that engendered increased importation immediately afterwards. Retail prices were more volatile in Oyo Market (35.8%) and
least volatile in Ogun Market (31.1%). The generally low price variability implied that consumers can effectively plan rice
expenditure. The ADF and PP tests revealed that all prices were not stationary at their levels but they attained stationarity after
first-differencing. Pair-wise market integration tests revealed 14 out of 15 market pairs had prices which were spatially integrated on
the long-run. Johansen’s multiple co-integration model results indicated 4 co-integration vectors out of 6 meaning that prices were
stationary in 4 directions and non-stationary in 2. The Granger causality model showed that IRM locations deficient in imported rice
were driving the prices in market locations with surplus of the commodity. It was recommended that the problem posed by highly
inefficient and fragmented distribution and transportation systems be addressed for the rice traders and consumers to take full
advantage of the high spatial market integration in the region.
Keywords
Retail price; Urban markets; Imported rice; Price co-movements; Market linkage; Southwest zone; Nigeria
1. Introduction and Problem Definition
As it gradually replaces cassava and yam in
households’ food bundles, there is a transformation in
the status of rice in Nigeria (Mafimisebi et al., 2014).
To most Nigerians, irrespective of socio-economic
status, rice is now a staple rather than a luxury food
item that it was in the 1970s and early 1980s (Akande
and Akpokodje, 2003; Daramola, 2005 and Odusina,
2008, Agunbiade, 2013). According to Akanji (1995),
Akpokodje et al. (2001) and Agunbiade (2013), a
combination of factors, which include rapid
urbanization and ease of preparing rice for food,
seems to have triggered the structural increase in rice
demand and consumption. Beside an increasing rice
demand at the household level (Odusina, 2008;
Agunbiade, 2013), there is an upward trending
number of fast food vending points as a result of rapid
urbanization which is causing rising consumption of
“out-of-home” foods by peri-urban or urban dwellers
engaged in formal or informal sector jobs (Mafimisebi
et al., 2014). Going by this scenario, it is reasonable to
expect that the demand for rice will continue to rise at
an increasing rate (FAO, 2005; Bamidele et al., 2010;
Odularu, 2010; Agunbiade, 2013). Furthermore, as
more married women, who were hitherto full-time
housewives, enter the workforce in both the formal
and informal sectors, the opportunity cost of their time
will increase and convenience food such as rice,
which can be quickly prepared for meal will become
more popular (Odusina, 2008 and Bamidele et al.,
2010, Agunbiade, 2013) in household diets.
Nigeria’s annual rice demand is estimated at 5 million
tonnes, out of which only about 2.2 million tonnes is
produced locally (Federal Ministry of Agriculture and
Rural Development, [FMARD], 2012). The annual
